Research Analyst at TF Securities
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Asked about the impact of the recent price wars in China's new car market on the company's used car business.
The company stated the impact is manageable due to their mature playbook, which includes dynamic pricing to maintain competitiveness, active management of inventory mix to reduce exposure to sensitive models, and the belief that the price war is a short-term situation concentrated in the NEV segment.
The analyst asked for details on the new stores in Zhengzhou and Wuhan, including the timeline to profitability and the financial impact in 2025. They also questioned the company's strategy for setting inventory limits based on demand and how it balances inventory levels with turnover rates.
The executives detailed the opening timeline for the new stores (Wuhan in H1 2025, Zhengzhou in H2 2025) and projected a 6-12 month period to reach breakeven. They explained that inventory levels are planned based on local car ownership and a target market share of over 20%. Despite increasing inventory, sales growth has been stronger, leading to accelerated turnover, and the company aims to maintain a 30-day turnover rate.